Is Your Identity Theft Insurance Enough in the Age of Data Breaches?
Almost anyone these days is a possible victim to identity theft. If you check your accounts often, you may already know the feeling of panic if there is an unidentifiable charge or change on there.
But do you need identity theft insurance? It’s a valid question when identity theft affects over a million people each year, sometimes causing devastating financial complications. Californians may be at an even higher risk due to the Golden State’s size and economic activity. Identity theft insurance coverage can provide peace of mind.
While nothing can ensure your identity will never be stolen, the right insurance coverage for identity theft can help you reduce the financial burdens related to recovering your identity if you become a victim. Learning more about coverage for identity theft will help you make informed decisions about whether you need it and how much coverage to get.
What Is Identity Theft Insurance?
Insurance for identity theft is a type of coverage that reimburses you for some of the costs that commonly arise when your identity is stolen. It covers expenses related to restoring your identity and repairing your credit.
When someone steals your identity, you’ll likely face costs related to restoring documents, legal assistance, and possibly services from restoration specialists. These expenses can cost hundreds of dollars that you’ll have to pay out of pocket if you don’t have coverage.
A comprehensive identity theft insurance policy will pay for a range of qualifying expenses, giving you the power to act quickly to restore your identity.
Evaluating the Need for Identity Theft Insurance
Reclaiming your identity after it’s been stolen can be expensive and time-consuming. However, as with all insurance policies, it’s important to weigh the costs against the risks. Before you invest in identity theft protection insurance, you should consider what you’re already doing to protect yourself and what you stand to lose if you become a victim.
Many people have some identity theft coverage and monitoring through a credit card, their employer, or a cyber theft insurance, homeowner’s insurance, or renters’ insurance policy. Checking your policies and all insurance or riders will help you identify if you already have this coverage.
Your financial and credit monitoring habits can also serve as a strong layer of protection against the financial burdens related to identity theft.
Using strong passwords and protective features like multi-factor authentication (MFA) can help you protect your accounts. Monitoring your accounts and opting in for alerts allows you to take immediate action (such as freezing your credit or disputing transactions) when unauthorized transactions occur.
Taking steps to protect yourself against identity theft can help you diminish the need for insurance. You may choose to opt out of a standalone identity theft insurance policy if you practice good cyber hygiene and have a minimum policy included in your homeowner’s or renters’ insurance policy.
Who Should Consider This Coverage?
While anyone can be a victim of identity theft, some people are at a higher risk because of lifestyle factors, employment, or specific vulnerabilities. People who should consider identity theft coverage include:
- People with significant assets to protect
- Individuals with extensive online accounts or who shop online frequently
- Those who don’t monitor their finances or credit closely
- Individuals who are aware that their information has been leaked in a breach or on the dark web
- Older adults
- Remote workers
- Families with children (family identity theft protection is often a good solution)
- People who have previously experienced identity theft
What’s Covered and What’s Not
Identity theft insurance varies by policy and carrier. However, covered costs are typically related to restoring your identity and recovering your credit. Financial losses that occur immediately after the theft, such as stolen funds and fraudulent charges, usually aren’t covered.
What Does Identity Theft Insurance Cover?
The coverage provided by Identity theft insurance companies varies by provider. But an identity theft insurance policy typically reimburses costs associated with recovering your identity, including:
- Costs of your driver’s license, Social Security card, and other ID
- Legal fees
- Lost wages (if you need to take time off work to restore your identity)
- Credit agency fees
- Bank fees related to fraudulent activity
- Notary and mailing fees
- Cost of identity restoration specialists
What’s Not Covered by Identity Theft Insurance?
Unfortunately, identity fraud prevention insurance can leave some potential coverage gaps. These are often related to direct monetary losses from the theft, including:
- Stolen cash
- Fraudulent purchases
- Unauthorized use of credit accounts
Comparing Identity Theft Insurance Options
It’s always a good idea to shop around for insurance policies that give you the coverage you need at the best price available. Insurance policies vary by carrier, which means every policy won’t have the exact same types of coverage.
For instance, some policies provide coverage for restoration specialists and credit monitoring, while others offer basic coverage for specific legal and documentation costs. When comparing policies, it’s always a good idea to consider cost, covered services, applicable deductibles, coverage limits, and how to file a claim.
Beyond Insurance: Strengthening Your Protection
Identity theft insurance is designed to help you mitigate the financial consequences related to restoring your identity after it’s stolen. It’s a product you hope you’ll never need because the impact of identity theft can be financially and emotionally devastating.
Luckily, there are certain actions you can take to protect your identity, making you less vulnerable to identity theft.
- Keep an eye on your credit score. Getting free reports or using an app that helps you keep track of your credit activity will help you recognize signs of fraud, unfamiliar transactions, or new accounts.
- Manually review credit card and bank statements. It’s not enough to assume the report is correct if your balances are close to the amount you expect. Identity thieves often test victims with small changes before taking larger amounts. Check for transactions you don’t recognize using a mobile app or paper statements.
- Use a password manager. Password managers help you create strong passwords and store them so you don’t have to remember them all. This is much safer than using the same password across multiple accounts.
- Enable multi-factor authentication. Requiring an additional form of ID can help you protect your accounts if a password is compromised. You’ll only need to take one extra step or enter a special code to access your account, but it will make it much more difficult for hackers.
- Sign up for data breach notifications. Enabling notifications on your most sensitive accounts will allow you to get alerts if the company gets hacked or if something suspicious is going on with your account. This tip is especially helpful for bank and credit card accounts.
Is Identity Theft Insurance Worth It?
Determining whether identity theft is worth it depends on your unique situation and the potential impact you could face if your identity is stolen. Keeping track of your bank and credit card transactions is one way to quickly stop the damage if your information is stolen, but identity theft protection and insurance combined is a better solution.
It’s important to remember that thieves can use your identity for an array of actions you may not become immediately aware of. Some of the most common include opening credit cards, applying for loans, stealing tax refunds, renting an apartment, and establishing utility accounts.
Any of these actions could leave you facing long-term consequences, such as poor credit or substantial debt, that can be difficult and costly to recover from. Talking to your insurance provider can help you assess your risk and find the best identity theft insurance for your needs.
Get a Free Quote Today for Identity Theft Insurance That Fits Your Needs and Keeps You Protected
Identity theft is a continually growing threat that can affect anyone. Californians are at a particularly high risk due to the state’s size, economic activity, and number of online transactions. Now that you understand the risks, the next step is making sure you have adequate protection.
Cost-U-Less Insurance specializes in providing the protection that Californians need at prices they can afford. Ready to protect your identity at a price that won’t blow your budget? Get an accurate online quote, call to speak to an experienced representative at (800) 390-4071, or find a nearby office and visit in person.
FAQs
What are the Most Common Signs of Identity Theft?
Some of the most common signs of identity theft include unfamiliar bills, unexpected credit card or bank charges, calls from debt collectors, and unauthorized accounts on your credit report. However, some signs might go completely unnoticed, such as the use of your identity to secure a job or rent an apartment.
Does Homeowner’s Insurance Cover Identity Theft?
Some homeowner’s insurance policies may automatically include a level of identity theft coverage. If it’s not already part of your policy, you may be able to include it as an add-on or rider to your homeowner’s or renter’s insurance. Some carriers may also offer identity theft as a standalone policy.
What Expenses Does Identity Theft Insurance Typically Reimburse?
Identity theft insurance typically reimburses expenses related to recovering your identity and repairing your credit. Covered expenses typically include legal fees, lost wages, document replacement fees, and bank or credit card account fees related to fraudulent activity. Since plans vary by provider, other costs may also be covered.
